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Monday, August 25, 2008

I.O.U.S.A - a larger version of I.O.U.K

A new film, in the Al Gore format, is causing something of a stir in the US. This snippet from the web site (and the video) gives you a flavour for what it is about.

Wake up, America! We're on the brink of a financial meltdown. I.O.U.S.A. boldly examines the rapidly growing national debt and its consequences for the United States and its citizens. Burdened with an ever-expanding government and military, increased international competition, overextended entitlement programs, and debts to foreign countries that are becoming impossible to honor, America must mend its spendthrift ways or face an economic disaster of epic proportions.

What you don’t get from this is the emphasis that the film places upon the costs of ‘entitlements’ (i.e. social security and medical care) and how they contribute to the financial problem.

It is not a great leap to go from here to “generational warfare” argument that we (the boomer generation) are leaving it to the young to pick up the tab (literally) for the care of parents and grandparents.

This has got my American friend Brent Green rather upset (understatement) and has inspired him to create a web site challenging the film’s arguments.America fiscal and balance of payment imbalance is massive. There is no room for Brits to get too smug about this - we are not far behind.The reasons why, and what to do about it, have similarities with the banal arguments that rage about the environment. I call it the "Xmas tree" phenomenon, where the tree represents the problem that can be dressed in many ways and with many guises, depending on your viewpoint.

Let me give you an example. The UK has a huge financial deficit. The supporters of the I.O.U.K argument will dress the problem in: “it is all the fault of the rich boomers, expecting the younger generation to keep working so that the oldies can live a fun filled 24/7 lifestyle”. The anti-war brigade will use a different set of arguments: “it is all the fault of Iraq, Afghanistan and the UK’s colonialist past that translates into mega defence weaponry systems costing a fortune. I have a different set of arguments: “it’s all the fault of the bloated, incredibly expensive and diabolically incompetent public sector”.

In truth, the tree is dressed with elements of all of these arguments, but as marketers we know that nobody listens to a diffused and complicated message. Dick Stroud

Thanks for including me in the spotlightideas.co.uk list of top advertising, marketing, media and PR blogs. Much appreciated.

Being in the top 100 is much better than my lowly 376th place in the Adage list http://adage.com/power150/---------------------------------Chuck,

Hopefully it was clear that I don’t blame ALL the UK’s ills on the public sector (yet to be defined) but was using it as an example of how single issues, like the budget deficit, are used as a focus for a tirade of personal gripes.

The public sector, in the UK, is where Government (both federal and state) spends tax payer’s money on providing ‘services’ (i.e. health care, tax collection, administration, policing, education, defence etc).

I think where the UK and the US have a mix-up of terms is where we define private education as where the individual pays and public where the state pays.

There is a very serious issue about public employment, more accurately the pensions paid to public sector employees. In the UK the defined pension scheme has nearly disappeared from the private sector (i.e. companies).

Company employees have to make their own pension arrangements. In the public sector the state pays the pensions out of current taxation. This is becoming a massive problem. What it means is that people in the wealth creating sector have to work longer, to generate more tax; just to pay for public employs to retire earlier on inflation protected pensions.

This is the UK’s I.O.U.K issue. At some stage it will have to be sorted. There is no secret about the enormity of the problem, politicians just refuse to do anything about it. Like most problems they tend to get worse the longer you leave them.

Dick Stroud

Dick Stroud

Founder of 20plus30, a consultancy specialising in marketing to older consumers. He is the UK’s leading expert in understanding the implications of physical ageing on the way older people behave and the products they buy.